Premium Video on Demand and the need for transparency

Since the announcement was made during CinemaCon that four major Hollywood studios have contracted with DirecTV to launch a premium video-on-demand (VOD) service that would radically shorten the current average four-month and 12-day window between the theatrical opening of a film and its release to the home market, everyone has been speaking out.

Time Warner chairman and CEO Jeff Bewkes offered an encouraging response when he stated that his company will evaluate the success of premium VOD trials over time to make certain the new early-release film window does not undermine theatrical ticket sales. “If it does, it will be something that we all have to rethink,” he asserted. He even went further, declaring that “nobody wants to cannibalize the theatrical window. This is a legitimate concern the exhibitors have, and it is a concern that we share.”

When you listen to the major theatrical exhibitors, you learn that the narrowing window is much more than just a legitimate concern. Many operators have made it clear that they want to ensure there is no infringement on their traditional business. Others feel that this is such a change in the landscape, it requires them to reevaluate the terms and conditions under which a circuit promotes, markets and exhibits those films going to DirecTV.

Now that this is a reality and movies have been released 60 days after their theatrical debuts—films like Sony’s Just Got With It, Warner Bros.’ Hall Pass and Fox’s Cedar Rapids—NATO is calling on distribution to be transparent. They have asked the studios participating in the premium VOD experiment to release sales figures for the movies released on that platform.

As John Fithian, NATO president and CEO, recently asked, “What’s an experiment without data?” The studios are eager to release weekend theatrical box-office figures and often do it before the weekend is even over. But so far, when it comes to premium VOD, nothing. If this is just an experiment, then the figures should be released and the entire process be made transparent. Exhibition certainly understands that studios need to make up the shortfall from the decline in DVD sales, but to do it in such a way that it could heavily impact exhibition is crazy. The possible unintended consequences of this studio initiative make it hard to justify at this time. Movie theatres create the film’s brand, and this is the most important catalyst to help maximize revenue opportunities for the studios.

In an open letter published in the Hollywood trades, a group of 23 leading directors and producers also called into question the plans of the studios to shorten the current model of theatrical release windows. The filmmakers asserted, “As a crucial part of a business that last year grossed close to $32 billion in worldwide theatrical ticket sales, we in the creative community feel that now is the time for studios and cable companies to acknowledge that a release pattern for premium VOD that invades the current theatrical window could irrevocably harm the financial model of our film industry.”

James Cameron emphasized, “Why on earth would you give audiences an incentive to skip the highest and best form of your film? My films aren’t going to the home early, but many will, and that will weaken the movie theatre industry—and then my movies are threatened.”

Perhaps if these filmmakers feel as strongly as they do, they will write into their contracts that their films cannot go to VOD in a mere 60 days.Why would the studios jeopardize their relationship with the theatres when they are pouring hundreds of millions of dollars into new venues, digital and 3D? Let’s wake up and preserve what’s been working for a hundred years. We need to get back to the basics, ladies and gentlemen.AMC Welcomes Chinese FilmsIt’s no secret that with minority groups growing in numbers and importance in the United States, many businesses are focusing interest on their economic impact and are looking to engage these groups with new products and services. In the motion picture industry, this is very evident with the proliferation of films catering to the Latino and black communities.

Recently, AMC Entertainment has garnered a good deal of success with Bollywood movies. Now, in an effort to reach a Chinese population that outnumbers Indian communities, AMC is focusing its attention on Chinese films. The theatre circuit has partnered with producer Jiang Yanming and former Village Roadshow exec Milt Barlow’s new distribution company, China Lion Entertainment, to open more Chinese pictures in North America, broadening the market for the films beyond the traditional art-house niche.

The first presentation last October was Feng Xiaogang’s earthquake drama Aftershock, the most successful movie in China last year. Playdates were set on 23 screens in key markets with a large Chinese demographic: New York, Los Angeles, Chicago, San Francisco, Washington, D.C., Houston, Boston, Seattle, Toronto and Ottawa.

China Lion is supplying 12 to 15 films per year to AMC in the U.S. and Canada. Interestingly, in most cases, the films are releasing day-and-date with China.

AMC has certainly taken the lead in offering its customers a diverse range of cinema experiences in their theatres. For more about their China Lion initiative, please read Doris Toumarkine’s exclusive interview with AMC president of programming Robert Lenihan and China Lion CEO Milt Barlow in our June issue.